On the Instability of Bitcoin Without the Block Reward
My main long term concern with Bitcoin has, for awhile, been the question of what happens when the block reward / subsidy gets close to zero. I have heard many reasonable concerns expressed about the prospect of a bitcoin without block subsidies, and no convincing rebuttals. So on this eve of the third halving, I'd like to raise this concern for discussion. To facilitate the discussion, I want to share a paper I'm currently reading, titled 'On the Instability of Bitcoin Without the Block Reward'. (PDF) Basically, they argue that in this scenario, option two can potentially be more profitable for a miner than option one. If you don't intuitively see it, I'd recommend reading at least the first page or so of the paper for a description of the problem. I'd also like to note, explicitly, this paper isn't arguing that fees can't replace block rewards. It's saying that this problem exist even if fees replace block rewards 1:1. That said, I do also worry that fees will have a very hard time replacing block rewards. Right now, even after the halving, each block is worth over 50,000 USD. Since a block can contain at most about 6,000 transactions, you're looking at fees of about 8 USD per transaction, absolute minimum. Even for opening/closing a Lightning Channel, that feels high. Sure, it'd be nothing to large institutions, but is that the future we want for bitcoin, a chain that prices out common users? And while it's true that the chain could operate with less rewards going to miners overall, that would have negative implications for security and transaction finality. Worse yet, it seems, is that without a subsidy, the security of the chain absolutely depends on this fee market developing. There needs to be a backlog of transactions for the chain to function function. Clearing the mempool becomes bad because 1 sat/byte fees aren't going to be adequate to secure the chain. So those are my thoughts on this. What are yours? I'd love to see some good and polite discussion around this topic, either around the specific concerns I've raised, or other concerns related to block subsidy reductions.
**DOLLERO NEWS** Can Bitcoin benefit from the instability of the monetary system?...The Covid-19 pandemic has caused people's daily lives to change completely for a while. However, the monetary policies of central banks around the world have also changed, which may suit Bitcoin in the long run 🏦🔥
Given the instability of the Lebanese banking system have any locals decided to buy Bitcoin?
I see mixed reports "15K USD Bitcoin in Lebanon" "No the Lebanese are not buying Bitcoin..." can someone on the ground give some insight as to whats going on there regarding crypto? Is anyone using USDT? or DAI? or any other form of crypto? Thanks In Advance [serious answers from locals please!]
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What does the US government shutdown mean for ETH?
edit: Government shutdowns are a somewhat regular occurrence and not usually catastrophic. However, this shutdown is certain to delay any government regulation of crypto in the US as well as delay any approval of derivative financial instruments. This article further speculates the possibility that distrust in government may inspire trust in decentralized currencies as an alternative History shows that when anarchy breaks out, Bitcoin's value skyrockets. But does ETH's value jump? Will the government shutdown in the US be reflected in crypto prices?
TL;DR - ETH has not historically been used as a "safe haven" asset when anarchy breaks out. Bitcoin was the defacto "safe" crypto that Zimbabwe and Venezuela relied on in 2017. Based on that, a government shutdown is most likely to positively effect Bitcoin price if it affects crypto prices at all. ETH price is historically correlated to Bitcoin price and will likely track BTC price movements
When economies become unstable, Bitcoin instability seems more palatable and Bitcoin becomes a substitute currency. Obviously, if a national currency might fall 90% in a year, Bitcoin's 30% tumble in a week seems pretty tolerable to that nation. We saw this in Venezuela and Zimbabwe in 2017. In the past, people looked to gold as a "safe haven" asset for when sh#t got cray. Most informed investors don't store value in gold for its stability (everyone has seen the charts and knows its volatile). They stored value in it because of its supposed lack of correlation to other financial asset. The belief is that if modern markets fail, the USD crashes, banks meltdown and anarchy ensues, then gold will retain its value because gold has decentralized trust in it's value - proven by thousands of years of decentralized currency exchange. Similar to the anarchist value of gold, Bitcoin has value in anarchy. That's why it skyrocketed in price when financial anarchy broke out in Venezuela and Zimbabwe. But here's the thing: When utter hell breaks lose, you can't buy gold - gold became centralized when the central banks and exchanges became the only way to buy or sell gold. But if you can connect to the internet, you can buy Bitcoin. And so many Zimbabweans and Venezuelans did when all else was falling apart. You can see that the needed stability to be a good "store of value" isn't just about current price volatility, but rather, in an implied trust that somebody, somewhere will be willing to buy my Bitcoin's if I f*#cking need to sell them f%!king now. Can ETH have the same anarchist value? I don't know. Historically, ETH isn't a currency of choice in times of chaos but it does tend track BTC price. In the future, it depends on Dapps. A Dapp network that supports Crypto Kitties doesn't seem too valuable when your own real cat just got blown to pieces by insurgents. Let's hope that 2018 brings smart contracts that we can rely on when we can't even rely on our own government
A friend of mine has an interesting point of view : "Bitcoin thrives on instability of States". Those last few months, we've seen a rise of protests. Inequalities, poverty, corruption etc. People seems to have enough. With the incoming economic crisis, those difficult situations won't improve. It feels like we are on the edge of a shift. I won't try to predict which form it will take, but as people distrust increasingly their government, Bitcoin has a chance to be a part of it.
Bitcoin has demonstrated a remarkable stability in recent weeks. Since early September, it has traded in the range of $6000-$6500. Fundamentally, price stability should be a bullish sign for Bitcoin. Bitcoin, affectionately known as digital gold, has crossed the $11,000 mark for the first time in three weeks. The fresh round of bullish sentiments come at a time of global instability. This strengthens its case as a safe haven asset. Bitcoin trades above $11,000 for the first time in three weeks. //Source: TradingView Bitcoin’s connection to political upheaval has much to do with its circumstantial status as a so-called “safe-haven” asset, or an asset that can be used as a safe place to store value when another asset–for example, a nation’s fiat currency–is rapidly losing value. Such instability is likely to benefit Bitcoin, which is increasingly establishing itself as a globally recognized store of value. 2. Global Economic Instability. Bitcoin instability remains. April 6, 2020. 0. The virtual currency market, as well as the ordinary financial markets, is currently experiencing strong volatility under the pressure of the current coronavirus pandemic. For cryptocurrencies, however, a price fluctuation is a normal and natural phenomenon. Thus, some analysts liken the current
US Plan to Delist Chinese Stocks Could Trigger Massive Bitcoin Buying
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